VEL
Velocity Financial, Inc.
$17.17
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 57.8% below fair value
You pay
$17.17
Bear
$27.12
Fair
$40.64
Bull
$48.76
Bear
$27.12
+57.9%
ROTCE 12.1% → 1.81x TBV
Fair
$40.64
+136.7%
ROTCE 16.1% → 2.71x TBV
Bull
$48.76
+184.0%
ROTCE 18.5% → 3.25x TBV
Key Value Driver
ROTCE (16.1%) vs. cost of equity (8.5%)
Implied Market Multiple
1.03x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $23.00 from 7 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $40.64 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $23.00 (from 7 analysts). Our estimate is 96% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly